Euro-zone officials have agreed that each euro-zone country
must prepare an individual contingency plan in the event that
Greece decides to leave the single currency bloc. The agreement
was reached during a teleconference of the Eurogroup Working
Group, which lasted for about an hour on Monday.

An index of European shares fell 2.2 percent to
close at 971.99.

"It's very frightening to hear about this kind of talk, even
if it makes sense as a contingency, because the lack of a clear
path there continues to be very problematic for banks," said
James Dunigan, chief investment officer of PNC Wealth Management
in Philadelphia.

An S&P index of financial shares fell 1.8 percent,
with Citigroup Inc down 2.6 percent at $26.21 and Capital
One Financial off 2.3 percent at $49.13.

The Dow Jones industrial average was down 171.42
points, or 1.37 percent, at 12,331.39. The Standard & Poor's 500
Index was down 18.01 points, or 1.37 percent, at
1,298.62. The Nasdaq Composite Index was down 37.81
points, or 1.33 percent, at 2,801.27.

Falling oil prices also dragged on the energy sector, with
an S&P index of energy companies' stocks down 1.9 percent. U.S.
crude oil futures fell $2 and dropped below $90 a barrel for the
first time since Nov. 1, as easing concerns about Iran's nuclear
dispute with the West and increasing worries about global
economic growth drove the price oil lower.

Stocks briefly trimmed their losses earlier in the session
after data showed new U.S. single-family home sales rose more
than expected in April and prices pushed higher, offering
further evidence the housing market was turning the corner.

"This adds to the growing sense that housing is stabilizing,
but it isn't enough to overcome the global issues driving the
day," said Dunigan, who helps oversee $112 billion in assets.

Facebook Inc and banks, including Morgan Stanley
, were sued by the social networking leader's
shareholders, who claimed the defendants hid Facebook's weakened
growth forecasts ahead of its $16 billion initial public
offering. The stock was up 2.4 percent at $31.74.

In the earnings arena, shares of Toll Brothers Inc
rose 0.3 percent to $27.10 after the largest U.S. luxury
homebuilder reported a second-quarter profit, beating analysts'
estimates, compared with a year-ago loss.